Exegesis Hermeneutics Flux Capacitor of Truthiness

June 15, 2018January 29, 2019

Hope without an object cannot live. This Land is Mine, Henry George and the Single Land Tax

Thus, clearly, money and goods are not the same thing but are, on the contrary, exactly opposite things. Most confusion in economic thinking arises from a failure to recognize this fact. Goods are wealth which you have, while money is a claim on wealth which you do not have. Thus goods are an asset; money is a debt. If goods are wealth; money is not wealth, or negative wealth, or even anti-wealth. They always behave in opposite ways, just as they usually move in opposite directions. If the value of one goes up, the value of the other goes down, and in the same proportion. The value of goods, expressed in money, is called “prices,” while the value of money, expressed in goods, is called “value.”

—”Near the window by which I write a
great bull is tethered by a ring in his nose. Grazing round and
round he has wound his rope about the stake until now he stands
a close prisoner, tantalized by rich grass he cannot reach,
unable even to toss his head to rid him of the flies that cluster
on his shoulders. Now and again he struggles vainly, and then,
after pitiful bellowings, relapses into silent misery.
This bull, a very type of massive strength, who, because he
has not wit enough to see how he might be free, suffers want
in sight of plenty, and is helplessly preyed upon by weaker
creatures, seems to me no unfit emblem of the working masses”

Samuel Taylor Coleridge’s published diaries Table Talk. Table Talk.
this from 27th April 1823.
The national debt has, in fact, made more men rich than have a right to be so, or, rather, any ultimate power, in case of a struggle, of actualizing their riches. It is, in effect, like an ordinary, where three hundred tickets have been distributed, but where there is, in truth, room only for one hundred. So long as you can amuse the company with any thing else, or make them come in successively, all is well, and the whole three hundred fancy themselves sure of a dinner; but if any suspicion of a hoax should arise, and they were all to rush into the room at once, there would be two hundred without a potato for their money; and the table would be occupied by the landholders, who live on the spot.http://www.gutenberg.org/cache/epub/8489/pg8489.html

Progress and Poverty: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth: The Remedy is an 1879 book by social theorist and economist Henry George. It is a treatise on the questions of why poverty accompanies economic and technological progress and why economies exhibit a tendency toward cyclical boom and bust. George uses history and deductive logic to argue for a radical solution focusing on the capture of economic rent from natural resource and land titles.

Progress and Poverty is George’s first book, which sold several million copies, exceeding all other books except the Bible during the 1890s. It helped spark the Progressive Era and a worldwide social reform movement around an ideology now known as ‘Georgism’. Jacob Riis, for example, explicitly marks the beginning of the Progressive Era awakening as 1879 because of the date of this publication.[1] The Princeton historian Eric F. Goldman wrote this about the influence of Progress and Poverty:

For some years prior to 1952 I was working on a history of American reform and over and over again my research ran into this fact: an enormous number of men and women, strikingly different people, men and women who were to lead 20th century America in a dozen fields of humane activity, wrote or told someone that their whole thinking had been redirected by reading Progress and Poverty in their formative years. In this respect, no other book came anywhere near comparable influence.[2]

Progress and Poverty had perhaps even a larger impact around the world, in places such as Denmark, the United Kingdom, Australia, and New Zealand, where George’s influence was enormous.[3] Contemporary sources and historians claim that in the United Kingdom, a vast majority of both socialist and classical liberal activists could trace their ideological development to Henry George. George’s popularity was more than a passing phase; even by 1906, a survey of British parliamentarians revealed that the American author’s writing was more popular than Walter Scott, John Stuart Mill, and William Shakespeare.[4] In 1933, John Dewey estimated that Progress and Poverty “had a wider distribution than almost all other books on political economy put together.”[5]

“Governments cannot reduce their debt or deficits and central banks cannot taper. Equally, they cannot perpetually borrow exponentially more. This one last bubble cannot end (but it must).

I often refer to debt serfdom, the servitude debt enforces on borrowers. The mechanism of this servitude is interest, and today I turn to two knowledgeable correspondents for explanations of the consequences of interest.

Correspondent D.L.J. explains how debt/interest is the underlying engine of rising income/wealth disparity:

In other words, those receiving interest are getting 5-6 times more than the increase in gross economic activity.

Using your oft-referenced Pareto Principle, about 80% of the population are net payers of interest while the other 20% are net receivers of interest.

Also, keep in mind that one does not have to have an outstanding loan to be a net payer of interest. As I attempted to earlier convey, whenever one buys a product that any part of its production was involving the cost of interest, the final product price included that interest cost. The purchase of that product had the interest cost paid by the purchaser.

Again using the Pareto concept, of the 20% who receive net interest, it can be further divided 80/20 to imply that 4% receive most (64%?) of the interest. This very fact can explain why/how the system (as it stands) produces a widening between the haves and the so-called ‘have nots’.

Longtime correspondent Harun I. explains that the serfdom imposed by debt and interest is not merely financial servitude–it is political serfdom as well:

As both of us have stated, you can create all of the money you want, however, production of real things cannot be accomplished with a keystroke.

Then there is the issue of liberty. Each Federal Reserve Note is a liability of the Fed and gives the bearer the right but not the obligation to purchase — whatever the Fed deems appropriate. How much one can purchase keeps changing base on a theory-driven experiment that has never worked. Since the Fed is nothing more than an agent of the Central State, the ability to control what the wages of its workers will purchase, is a dangerous power for any government.

If a Federal Reserve Note is a liability of the central bank, then what is the asset? The only possible answer is the nations productivity. So, in essence, an agent of the government, the central bank, most of which are privately owned (ownership is cloaked in secrecy) owns the entire productive output of free and democratic nation-states.

People who speak of liberty and democracy in such a system only delude themselves.

Then there is the solution, default. That only resolves the books, the liability of human needs remain. Bankruptcy does not resolve the residue of social misery and suffering left behind for the masses who became dependent on lofty promises (debt). These promises (debts) were based on theories that have reappeared throughout human history under different guises but have never worked.

More debt will not resolve debt. The individual’s liberty is nonexistent if he does not own his labor. A people should consider carefully the viability (arithmetical consequences) of borrowing, at interest, to consume their own production. The asset of our labor cannot simultaneously be a liability we owe to ourselves at interest.

Thank you, D.L.J. and Harun. What is the alternative to the present system of debt serfdom and rising inequality? Eliminate the Federal Reserve system and revert to the national currency (the dollar) being issued by the U.S. Treasury in sufficient quantity to facilitate the production and distribution of goods and services.

Is this possible? Not in our Financialized, Neofeudal-Neocolonial Rentier Economy; but as Harun noted in another email, Governments cannot reduce their debt or deficits and central banks cannot taper. Equally, they cannot perpetually borrow exponentially more. This one last bubble cannot end (but it must).

What we are discussing is what will replace the current system after it self-destructs.

The mechanism for the accelerated growth of indebtedness and corresponding monetary assets – a veritable infernal machine – is described in full detail in “The Money Syndrome” by Helmut Creutz.http://www.themoneysyndrome…
The following graph is taken from the book “The Money Syndrome“. It shows the market participants divided into 10 groups according to their disposable income and the amount they are using for consumption per year (the green columns). The orange columns indicate the interest payments hidden in consumer prices and the blue columns show average interest returns that the members of the respective groups receive from owning an interest bearing asset.
redistribution mechanism
The following graph is an extraction of the above figure and shows the balance of interest payments and interest yields. The balance of group 9 is almost even. The members of this group own interest bearing assets worth at least 450,000 euros, which yield as much interest returns as they pay while annually spending 50,000 euros for consumption. All lower groups have smaller assets the returns from which don’t suffice to compensate for the losses in consumption. Therefore, their balance is negative. Only group 10 has a positive balance and collects what the majority of market participants (groups 1 to 9) lose in this game. The growing gap between rich and poor is often referred to in the public discussion, but no one ever asks how it is caused. At any rate, primarily the creditors in group 10 should be asked to contribute to the emergency parachute for Greece, because they are the winners in the game.
The whole premise of the article seems wracked with the same sophistry that we see in Jeremy Bentham’s , A defence of Usury. Why is PM bothering itself as an apologist and sophist for Usury?
Bentham’s Defense of usury is flawed in that it misunderstands the Debt aspects of Money creation, which was not as bad then as it is now but was still a system being pedalled by the infamous John Law in France.http://en.wikipedia.org/wiki/John_…

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